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The start of a new month can provide plenty of motivation for savers to revisit their approaches. With many things to do with their money and mistakes to avoid, particularly in today’s inflationary climatemaking the right decisions is more important than usual. For current certificate of deposit (CD) account holders, knowing what to do next is equally as important as knowing what not to do. And that’s especially true if you have a current CD account with a maturity date circled on the calendar for this July.
Savers will have a limited grace period, often two weeks, approximately, depending on the lender, in which they can work with these funds before they get locked away again. So it’s important to have a plan now, in advance, so that they can continue having their funds work for them securely and profitably. To improve their chances of success, savers should know what mistakes to avoid specifically in today’s unique economic landscape. Below, we’ll break down three worth knowing right now.
Start by seeing how high your new CD rate offers are here.
What not to do if your CD account matures this July
Have a CD account set to mature sometime between now and July 31? Be sure to avoid doing these three things before that point:
Let it automatically roll over
If you let that grace period conclude without taking any action, you may regret it. That’s because most CDs will then roll over into a new version, potentially one with an interest rate that’s not nearly as competitive as what you would have secured if you spent the time shopping around for accounts.
Don’t let that happen, then. With multiple high-rate options available right now and no pressing need to lock one in before any interest rate cut, now is the smart time to diligently shop around for accounts and rates. But you won’t be able to find the best offer if you let your funds automatically roll over into a new account. Instead, inform the bank now of your plans to regain access and, more importantly, start shopping around for alternatives in the interim.
Shop for high-rate CD accounts online now.
Put it back into a traditional savings account
Around 980%. That’s how much more profitable a 6-month CD with a top rate of 4.10% is compared to the 0.38% average rate a traditional savings account offers now. It makes no sense, then, to put your maturing CD funds back into this sort of account.
While putting it back into a CD will mean extended loss of access to your money, there are still high-rate alternatives like high-yield savings and money market accounts that will allow you to continue making withdrawals and deposits as needed. Consider those options, too. Just don’t put your money back into the traditional account as you’re essentially losing money when you have multiple, exponentially more profitable accounts to leverage instead.
Dismiss the advantages a long-term CD can offer
Not only do long-term CDs currently come with rates comfortably over 4% for savers right now, but they offer something short-term CDs, which mature in less than a year, cannot: extended protection for your money. Because CDs have fixed interest rates, your earnings will be guaranteed even if the interest rate climate changes over time. And your principal won’t change.
This is a major advantage for savers looking to weather today’s market uncertainty, especially for those who expect it to continue unabated for the foreseeable future. Don’t dismiss the advantages a long-term CD can offer, then, as it can be both a profitable and safe home for your money for the next 18 months or longer.
The bottom line
Sometimes, knowing what not to do with your money is equally as important as knowing what to do with it. And that’s especially applicable for those who have a CD account set to mature this July. By avoiding these three missteps, savers can continue earning a high rate while still protecting their money. It’s important to start this work now, however, before the maturity date arrives and while your options for your next money moves remain as varied as they are currently.